Changes
Canada might have an early election … or not. The CBC provides an explainer that is rather confusing to someone who isn’t versed in the parliamentary system.
Apparently, the opposition has the votes to force an election, but they want it forced on their terms, not as a result of a failure of the budget to pass. It would seem that the budget was drawn up knowing it wouldn’t pass, so it contains “gifts” for different voting blocs so the Conservatives can tell voters that the nasty opposition parties don’t support puppies, kittens, small children, and widows, or some such foolishness.
The opposition wants the government to fall on a no confidence vote concerning certain actions that have been adjudged to be “contempt of Parliament”, so they can campaign on how corrupt and ruthless the Conservatives are.
It gets confusing for Americans, because the Canadian parties are actually different, with different policies and solutions for problems, and some of those policies are actually left-leaning. It is hard for US voters to believe that such policies and principles still exist in politics.
There are definitely going to be elections in Portugal, as the latest austerity budget has been rejected.
The ABC carries an AFP report: Portuguese PM quits amid debt crisis
After resisting pressure from financial markets for months, Portuguese prime minister Jose Socrates finally fell victim to the eurozone debt crisis on Wednesday after the rejection of his minority government’s latest round of austerity measures.
His resignation on the eve of a summit of EU leaders could trigger a demand for a financial bailout like the one granted to Greece and Ireland last year.
…Just two weeks ago Mr Socrates’s minority socialist government announced a new package of austerity measures – its fourth in just under a year – that it said would “guarantee” Portugal’s public deficit would be slashed to 2.0 per cent of GDP by 2013.
The plan, which called for new taxes, cuts in social programs and higher public transport fares, was welcomed by the European Commission and the European Central Bank, which issued a joint statement to praise it.
But for Mr Socrates the “great victory” obtained in Brussels quickly turned to defeat in Lisbon as all opposition parties proposed resolutions calling for the rejection of the austerity measures.
…The government introduced its first austerity package in March 2010 aimed at reining in a record public deficit equivalent to 9.3 per cent of GDP in 2009, the fourth-biggest in the euro region after Ireland, Greece and Spain.
Despite the belt-tightening, all major international credit agencies cut their debt ratings for Portugal, raising the country’s borrowing costs.
Even as the public began to feel the effects of the austerity measures, the government saw its expenses increase, in part due to rising unemployment.
Earlier this week the government finally joined economists in predicting the economy would contract this year due in large part to the austerity measures.
It predicts GDP will fall 0.9 per cent this year after expanding 1.4 per cent in 2010.
So, let’s see – austerity was introduced and the financial markets, the European Commission, and the European Central Bank all praised Portugal, but the credit agencies cut Portugal’s bond rating, and the economy is going back into recession.
Gee, austerity doesn’t seem to be the magic solution that Very Serious People assured us it was.
4 comments
“Despite the belt-tightening, all major international credit agencies cut their debt ratings for Portugal, raising the country’s borrowing costs.”
If I understood Paul Krugman correctly in his book The Return of Depression Economics and the Crisis of 2008 (the 2009 edition), it is his opinion that such ratings are often changed all out of proportion to the provocation, and not necessarily on a rational basis. That is, if I understood correctly, always a big “if” in matters of economics.
You’re correct, Steve. Portugal cut their expenses to be better able to pay off their obligations, and the ratings on the their bonds were downgraded.
It would be like someone getting their credit card rate increased because they were making extra payments to reduce the balance.
Of course, the true insult is that the ratings agencies are the ones that rated the garbage derivatives being sold by the banks as “investment-grade” and low-risk, until they collapsed the world’s economy. They are another group that belongs in prison for fraud, like the too big too fail bankers.
The ratings agencies claim they’re immune to fraud convictions because they’re only providing their opinion, they’re not selling anything, and you can’t throw people in jail for expressing their opinion. Well, except Democrats expressing their opinion within eyesight of a Republican President. But that’s another story.
My take on it: Being paid to lie and say that trash is “as good as cash” makes you a participant in fraud. If it was an honest mistake that’s one thing. But it’s come out now that many of these bonding rating agencies *knew* that they were rating trash as cash, and did so anyways, because it brought in the commissions.
Of course, at that point you say, “But if that’s fraud, then Presidential spokesmen who knowingly lie for their administration’s benefit are guilty of fraud too.” Uhm, yeah. So I expect the ratings agencies to be brought up on fraud charges about the same time as Condi “Mushroom Cloud” Rice. Uhm, like, never. SIiiiiigh! Rule of law. It’d be a great idea!
– Badtux the Rule of Law Penguin
The Federal fraud laws have been written to shield the Wall Street criminals. All they have to do is claim stupidity and they can’t be convicted. The laws are different in the states, which is why there are occasional convictions, especially in New York. Of course, this is also why the FBI got interested in a prostitution ring, which resulted in the resignation of Eliot Spitzer. If you convict the masters of the universe they will come after you, just like any of the other organized crime families.
An Irish comedian said he heard that all of the bond rating agencies were going to merge into a single company – Moody & Poor.
That would at least be an honest announcement of their product.